High 30-year mortgage rate 7.5% drives ARMs up, applications fall

Business Oct 14, 2026

With 30-year fixed mortgage rates now at 7.5%, more people are turning to adjustable-rate mortgages (ARMs) for their lower starting payments, even though those rates could rise later.

ARMs now make up 10.5% of mortgage demand, the highest level in a year.

But overall, fewer folks are applying for mortgages: applications dropped 2.75% last week and are down 37.5% from last year, showing how tough it's getting to afford a home.

Refinances plunge, homebuyers struggle to qualify

Refinancing has taken a big hit (applications fell by more than one-half compared with last year) and buying isn't much easier, with purchase applications dropping 16%.

Even though there are more homes on the market, especially pricier ones, higher prices and interest costs mean fewer buyers can actually qualify.